Human resource planning (HRP) is defined as the process in which human resource requirements are reviewed so that the required number of employees, along with the necessary skills & experience, are available when needed. Human resource planning starts after the preparation of strategic plans by top management.
Components of Human Resource Planning
There are two components of human resource planning, which are as follows:
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Requirements
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Availability
In estimating human resource requirements, the number of employees along with the required level of skills & expertise at certain locations should be determined. On the other hand, the availability component of HRP involves analyzing the sources for acquiring desired employees from both internal and external sources.
After analyzing requirements & availability, the organization must determine whether it will face a shortage or surplus of employees. If a surplus is expected in the future, management adopts certain methods to address the issue, such as reduced hours, restricted hiring, layoffs & early retirements.
In case of an expected shortage of employees, management must acquire the required number of employees with desired skills from outside the organization. In such situations, external applicants should be recruited & selected to cover the shortage.
Human resource planning is essentially forecasting future human capital requirements & designing action plans to meet those requirements. It ensures that when employees are needed, the right people are acquired at the right time & in the right place.
Objective of Human Resource Planning
The basic objective of human resource planning is to enable an organization to forecast future human capital requirements along with action plans to fulfill those requirements.
Benefits of HRP
There are several benefits associated with human resource planning, some of which are as follows:
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It assists in planning job assignments.
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Staffing fluctuations are effectively managed.
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Recruiting needs are identified at the proper time.
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Other useful information is provided through it.
Planning as Forecasting
Forecasting in an organization takes place in two aspects of human resources, which are as follows:
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Demand forecast of workforce
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Supply forecast of workforce
To perform forecasting activities, the following approaches are used:
1) Statistical Approaches:
a) Trend Analysis
b) Ratio Analysis
c) Regression Analysis
2) Judgmental Methods:
a) Managerial Judgment
Furthermore, two activities are involved in forecasting:
• Existing HR staffing programs are monitored.
• Future HR concerns & needs are investigated.
Forecasting Requirements of Human Resources
As mentioned earlier, forecasting human resource requirements means anticipating the number & types of employees required by the organization in the future to accomplish its objectives.
Several techniques are used by organizations to forecast human resource requirements & availability. Some of them are as follows:
Zero Base Forecasting
In this technique, the existing level of employment in the organization serves as the starting point for determining future staffing needs. Thorough analysis of human resource requirements is the key to zero base forecasting.
Bottom-Up Approach
In the bottom-up approach, forecasting human capital requirements starts from the lowest organizational level and gradually moves to upper levels. In this way, the overall employee requirements are forecasted.
Use of Mathematical Models
Certain mathematical models are helpful in forecasting human capital requirements. The relationship between the number of employees required & sales demand can be a useful factor.
Simulation
In this method, a mathematical model is used to represent real-world situations. The model acts as an abstract experimental representation of real-life scenarios.
Forecasting Availability of Human Resources
Availability forecasting includes determining the ways & sources of obtaining required human resources.
Surplus of Employees Forecasted
Comparing availability & requirements may result in a surplus of employees, which leads to the following techniques:
a) Restricted Hiring: The organization does not hire new employees when existing employees leave.
b) Reduced Hours: Working hours are reduced (for example, from 40 hours per week to 30 hours) due to declining demand.
c) Early Retirements: Surplus employees may be reduced through early retirement schemes.
d) Layoffs: The organization may lay off extra employees to manage surplus human resources.
Shortage of Employees Forecasted
In case of a shortage of human capital, the following techniques can be applied:
Creative Recruiting
When HR shortages arise, organizations attempt to recruit employees from different geographical areas with the required skills & knowledge.
Compensation Incentives
During high-demand situations, organizations may use reward incentives to attract more employees. However, this method can be harmful in the long run. Incentives include flexible working hours, a four-day workweek, childcare centers, part-time employment & premium pay.
Training Programs
Training programs are introduced to convert unskilled employees into skilled & knowledgeable workers through skills training & remedial education. These programs also help attract new employees.
Different Selection Standards
In some situations, selection standards may be lowered so that a sufficient number of employees can be selected for designated positions. Organizations may also modify policies to hire inexperienced workers and provide them with proper training to perform their jobs effectively.
